MAR Marriott International Inc

By Aisha Al-Muslim 

Marriott International Inc., the world's largest hotel company, reported a lower profit in the latest quarter as higher operating costs offset modest growth in a key revenue metric that reflects pricing power.

Marriott, the parent of such hotel brands as Ritz-Carlton, Westin and Renaissance, reported a first-quarter profit of $375 million, or $1.09 a share, down from $420 million, or $1.16 a share, a year earlier.

The Bethesda, Md.-based company had comparable systemwide revenue per available room, or RevPAR, growth of 1.1% world-wide excluding currency fluctuations. However RevPAR grew at a faster pace outside of North America than it did on the continent, Marriott said Friday.

The company said it incurred $44 million of expenses and recognized $46 million of insurance proceeds related to the data breach the company disclosed in November. Marriott has said a hack in the reservation database for its Starwood properties may have exposed the personal information of up to 500 million guests, but that number was later revised lower.

Excluding merger-related costs, cost reimbursement revenue, and other items, the company posted earnings of $1.41 a share, higher than the $1.34 a share expected from polled by Refinitiv.

Revenue was roughly flat from a year earlier at $5.01 billion, and was below the consensus forecast of $5.11 billion.

Marriott on Friday maintained its full-year forecast for RevPAR to rise 1% to 3% world-wide. For 2018, world-wide RevPAR increased 2.9%, or 2.6% when excluding currency fluctuations. Marriott also guided earnings per share of $5.97 to $6.19 for this year, compared with its prior estimate of $5.87 to $6.10 a share.

For the second quarter, the company guided world-wide RevPAR of 1% to 3%. The company also guided earnings per share of $1.52 to $1.58, compared with analysts' estimates of $1.34 a share.

In recent weeks, Hilton Worldwide Holdings Inc., Hyatt Hotels Corp. and Wyndham Hotels & Resorts Inc. have also reaffirmed their full-year RevPAR growth outlook of about 1% to 3%. On Thursday, Choice Hotels International Inc. said its domestic RevPAR is expected to increase 0.5% to 1%, a lower range compared to its previous guidance of 0.5% to 2% growth for the full year.

Hotel companies have signaled that RevPAR is expected to slow down this year compared with 2018 due to pressure from a maturing global economy, a relative slowdown in China and worries about the impact of Brexit on Europe.

Last week, Marriott said its chief executive, Arne Sorenson, 60 years old, was diagnosed with stage 2 pancreatic cancer and was expected to undergo chemotherapy this week. Mr. Sorenson, who has been CEO since 2012, will remain in his role, the company said.

Under his leadership, Marriott also plans to move deeper into the home-sharing space, competing even more with Airbnb Inc., Expedia Group Inc.'s Vrbo and others. In late April, Marriott said it was starting to offer this week accommodations in about 2,000 high-end homes throughout 100 markets across the U.S., Europe and Latin America. Hilton Worldwide Holdings Inc. said last week alternative accommodations isn't a business it is currently pursuing.

Mr. Sorenson led the acquisition of Starwood Hotels & Resorts Worldwide in September 2016, creating a giant with more than 5,500 hotels and 30 hotel brands. In March, Marriott said it is planning to open more than 1,700 hotels over the next three years.

Marriott is still working through problems associated with its Starwood acquisition, including the hack of the reservation database for Starwood properties. There have also been problems integrating the rewards-points system, and an activist investor had criticized the company for having too many brands.

Recently, the company has been focusing on boosting its rewards programs and driving customers to book directly on its websites. In February, Marriott International changed the name of its loyalty program to Marriott Bonvoy.

Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

May 10, 2019 07:53 ET (11:53 GMT)

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